June 2022 – The First Business Simulation

Top Management Decision Simulation

I’m guessing you will be as surprised as I am to learn that one of the first text games with “back-and-forth natural language interaction between a human and computer” was Top Management Decision Simulation[1], the first business simulation.

Top Management Decision Simulation was developed in 1957 by the American Management Association (AMA). Its goal was to help an executive “increase his capacity as a business decision maker”[2]. The process will probably sound familiar to you[3]: participants were broken into teams of three to five; each team ran their own company competing against each other in a “hypothetical market”[4]; the competition lasted for 5 to 10 simulated years (each year had four quarters of decision making). At the end of each decision period/quarter, participants received several reports like the Income Statement, Marketing Research, etc.

Top Management, however, had its limitations. Its simulated market only had one product and it was decided that no winner would be declared[5]. Entering decisions wasn’t as swift as typing on a keyboard and pointing with a mouse. There was a key-punch operator who transferred “the decisions into machine language, one card for each company”[6].

We have certainly come a long way from punch cards and key-punch operators. Nonetheless, the goal is still the same: make business leaders better decision-makers.

This is a key point to remember when building a business simulation. Technology now allows us to build business simulations as complex as humanly imaginable. However, more decisions, more reports, more screens, more data, etc. don’t necessarily translate into more learning. On one end, you don’t want to make it too simplistic as it becomes “unrealistic”/just a game. On the other, you don’t want to make it too complex as participants lose interest and it’s hard to keep track of cause and effect. Either case distracts from the learning.

Donald Knuth, the “father of the analysis of algorithms”[7], said

“My feeling is that when we prepare a program, it can be like composing poetry or music; as Andrei Ershov has said, programming can give us both intellectual and emotional satisfaction, because it is a real achievement to master complexity and to establish a system of consistent rules.”[8].

This is a reminder that there is an art and science in building a business simulation. The science portion will help us with math, code, formulas, speed, performance, etc. But to drive home the learnings, we need to master the art of making a business simulation with the right level of complexity. The level that keeps participants engaged and will help them become better decision-makers.




[1] Reed, A., 2022. “Business Wargames: Early Complex Text Games“. [online] If50.substack.com. Retrieved June 16, 2022.

[2] Ricciardi, F., Craft, C., Bellman, R., Clark, C., Kibbee, J. and Rawdon, R., 1957. Top management decision simulation the AMA approach / by [the AMA research group]. [online] HathiTrust. p.117. Retrieved June 16, 2022.

[3] Ibid, p.83

[4] Ibid, p.83

[5] Ibid. p. 68

[6] Ibid. p. 84

[7] https://en.wikipedia.org/wiki/Donald_Knuth

[8] Knuth, D., 1974. Computer Programming as an Art. [online] Dl.acm.org. p.667. Retrieved June 16, 2022.